Key information
- At the time of publication of this article, the price of a barrel of Brent stood at $77.08.
- West Texas Intermediate oil futures were listed at $73.37 per barrel.
- Analysts predict continued volatility in the oil market due to uncertainty over Israel’s response to Iranian rocket attacks.
Oil prices took a pause in their recent rally as investors awaited Israel’s response to last week’s Iranian missile attacks, but have now started to rise again. The uncertainty follows Monday’s price surge, with both benchmark contracts surpassing their highest levels since late August. Concerns about potential disruptions to Middle East oil supplies fueled the initial rise in prices, which peaked with a weekly gain of 8 percent, the largest in more than a year.
At the time of publication of this article, the price of a barrel of Brent stood at $77.08. West Texas Intermediate oil futures were listed at $73.37 per barrel.
Market expectations and volatility
Analysts expect continued volatility in the oil market. Panmure Liberum’s Ashley Kelty suggests profit-taking could put pressure on prices if no significant developments occur in the Middle East. Tamas Varga of oil brokerage PVM notes that while Iran’s involvement in the conflict remains a concern, actual supply disruptions have yet to materialize, adding that it is unlikely likely that attacks will be launched against Iran’s oil infrastructure.
Some analysts warn that if Israel chooses targets other than Iranian oil facilities, oil prices could come under severe downward pressure. UBS’s Giovanni Staunovo attributes the recent price decline to a lower risk environment driven by investor disappointment over China’s latest stimulus measures.
Impact on fuel demand and regional developments
While China expressed confidence in achieving its full-year growth target, it refrained from implementing tougher fiscal policies. This cautious approach disappointed investors who expected greater support for the economy. Slowing growth and its potential impact on fuel demand in China, the world’s largest importer of crude oil, continues to raise concerns.
Traders are also awaiting data updates on U.S. crude oil inventories, with analysts expecting a rise.
Climate impacts
In the United States, Hurricane Milton intensified into a Category 5 storm, prompting the shutdown of at least one oil and gas platform in the Gulf of Mexico on Monday. Milton has since weakened and moved back to Category 4, meaning he should be less destructive but still considered very powerful.
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